Safety Perspectives From The Dallas Region: From Chevron To Jarkesy—The Supreme Court's Shadow On Safety Law (Podcast)

In this episode of our Safety Perspectives From the Dallas Region podcast series, shareholders John Surma (Houston) and Frank Davis (Dallas) discuss the recent Fifth Circuit decision that found the dual for-cause removal protections for administrative law judges (ALJs) at the National Labor Relations Board unconstitutional, and its implications for the Occupational Safety and Health Review Commission (OSHRC). The speakers break down how this ruling could halt OSHA enforcement proceedings in the Fifth Circuit, potentially render the current OSHRC structure unconstitutional, and force Congress to revisit the statutory framework for workplace safety adjudication.

Transcript

Announcer: Welcome to the Ogletree Deakins podcast, where we provide listeners with brief discussions about important workplace legal issues. Our podcasts are for informational purposes only and should not be construed as legal advice. You can subscribe through your favorite podcast service. Please consider rating this podcast so we can get your feedback and improve our programs. Please enjoy the podcast.

Frank Davis: Good day, and welcome to another episode of the Dallas Region safety podcast. My name is Frank Davis. I'm a shareholder in the Dallas office of Ogletree Deakins. With me, I have John Surma broadcasting to you down from our Houston Ogletree tower.
John, good day to you.

John Surma: Good morning, Frank. And I'm looking forward to this podcast a whole lot, and I always look forward to chatting with you, and we've kind of alluded to this with our audience before. We have a tendency to chat for a while before we do the podcast. And this morning's chat was a good one, and as always, and I enjoyed it, and I'm looking forward to this podcast with you.

Frank Davis: Yeah, no, this is a good one. And you've kind of got some big news and big updates. About nine months ago, you had a case out of another part of our region that looked pretty ugly, the OSHA, the administration that issued some significant citations against one of our clients. And one of the ways that you challenged those citations was by challenging the authority of OSHA to enforce those citations. Do you mind giving us all a little bit of background, catch us up, reminding us what happened in that case?

John Surma: Sure. I'm happy to talk about this subject, and especially chatting about it with you. And so, in short, the client had been issued a single, willful general duty clause citation, and on receipt of that citation, a full penalty. It appeared that it was a situation where we were going to have to kind of put the full court press on. And so, in talking with the client, we explained that we thought we had the basis for a pretty good challenge to the Occupational Safety and Health Review Commission applying some of the theories of the…and everybody questions how you pronounce the name, but the SEC v. Jarkesy case, and whether or not that would apply to our case, and whether or not we had other constitutional arguments for the premise that…not that OSHA didn't have authority to issue citations per se, but that instead that it didn't have an enforcement mechanism in as much as the Occupational Safety and Health Review Commission, for a variety of reasons, it was unconstitutional and wasn't rooted in constitutional principles.
And that ranged everywhere from the multiple layers of for-cause removal, to the fact that it denied a litigant, the respondent in an OSHA citation, a right to a trial in a U.S. district court by jury, to the fact that we have an Occupational Safety and Health Review Commission that, at this juncture, has zero commissioners, and therefore technically can't make decisions on its own. And so, we were kind of challenging the constitutionality on a variety of bases, and it was an interesting approach to this that ultimately seems to have been successful. And I'll stop there, and let you go on.

Frank Davis: So, you filed an application for injunctive relief for multiple reasons that you've listed here. Ultimately, it comes down to the fact that the review commission has structured through the multiple layers that prevents the president from removing administrative law judges, and administrative law judges are frontline triers of fact for these OSHA citations. Your motion, or your application, for injunctive relief was asking the federal court to do what?

John Surma: Well, ultimately, the injunction would have prevented the administrative law judge, basically, allowing the litigation to proceed forward until we got sorted out whether or not the Occupational Safety and Health Review Commission, OSHRC, was constitutional or unconstitutional.

Frank Davis: Okay, so stop right there. So, your application for injunctive relief was to say the OSHA judge, the OSHA administrative law judge, can't hear this case, right? And so, if the OSHA administrative law judge can't hear the case, then how does the enforcement of an OSHA citation proceed?

John Surma: It cannot.

Frank Davis: So, what happens to it at that point?

John Surma: Well, that's a good question. I mean, ultimately if it can't be adjudicated, to use your expression, justice delayed is justice denied, and that's a constitutional violation in and of itself. And so, you kind of bootstrap into the argument that OSHA is unconstitutional at that juncture because there's no way for these citations to be litigated.

Frank Davis: So, you say OSHA is unconstitutional. What do you mean by OSHA? You mean the OSH Act, or the administration, or both?

John Surma: Well, technically both.

Frank Davis: Is that right? How was that possible? Since 1970, we've had the OSH Act, and we've had the Occupational Safety and Health Administration going around conducting inspections, issuing citations, hearing these cases before administrative law judges. We've even had a case in the past, I think it was maybe Atlas Roofing, that said that the structure was okay, and that was a Supreme Court decision. How has all that changed now here in our…21st century? How has that suddenly changed?

John Surma: Yeah, it's hard to believe we're in the 21st century, and back when we were in high school, they were talking about flying cars by now, and I don't see a whole lot of them on the road. I mean, just like our view of what 2020 was going to look like has changed, so too has the Supreme Court changed, and the Supreme Court has really gone in directions that I don't think anybody really expected, from the overturning of Chevron deference that existed since the early '80s, to the Jarkesy case that basically made a determination that the SEC structure for adjudicating citations was unconstitutional. I mean, there's been a lot of change in the courts that has resulted in a significant change in terms of how we can argue some of these things, and quite frankly, challenge the Atlas Roofing case. I mean, you and I were talking about it, at the end of, not this most recent term, but the 2023/2024 Supreme Court term, Justice Thomas penned a dissent in the Allstates Refractory case.
And in that case, he basically says, “Look, if you look at these different cases, we have a bunch of justices who are of the opinion that this legislation, such as the OSH Act, unconstitutionally grants too much decision-making authority to these administrative agencies,” and we should be looking at things like the OSH Act, which, in his words, has the most expansive delegation of decision-making authority, and determine whether or not these things are constitutional. I mean, I think he's pretty clear in it. He thinks that there's a majority of the justices that will make the determination that it's not constitutional to give OSHA that much jurisdictional leeway.

Frank Davis: Yeah, he said at least five other justices. There's only nine, so that's a majority of the court.

John Surma: Yes, sir.

Frank Davis: So, how'd your case turn out?

John Surma: Well, I'll give you a little bit more nitty-gritty than you maybe want, but I think it's fair to do this. So, OSHA had a week or two before we had a resolution, reached out about a settlement proposal, and asked us to engage in settlement negotiations in good faith. They made an offer that didn't seem to make a lot of sense given that what they were looking for was for the client to do a hazard assessment of its operations, not for purposes of PPE, but for purposes of determining whether or not they could structure the operation differently than they did and make it more safe. So, they wanted us to accept a citation under 1910.132, which is the PPE hazard assessment standard, and basically look at the operation and make a determination as to whether or not there was a safer way to do it.
We objected on the basis that it was kind of a square peg, round hole situation. That wasn't the intent of that standard. But then we also had concerns about what the abatement was going to be. Without revealing all the details, the nature of the client's operations being such that putting any more space in it was just going to increase the hazards associated with the process. Day before, two days before, we ultimately get the resolution. There was some contact that said, “Look, we need an answer on this by close of business,” whatever day it was. And we are kind of going back and forth, and we're genuinely digging into this and trying to figure out, is there a way for us to make this work?
And ultimately kept telling OSHA through this Solicitor Labor's office, “Hey, look, we have concerns about this, or we have concerns about that. How do we address this?” And we got answers that didn't seem to really line up with what was practical on the ground, but we're trying to, you use the phrase, negotiate in good faith. The deadline passed, and we were still trying to sort it out, and the following morning, early, received an email from the solicitor assigned to it saying, “Here's a joint notification of withdrawal of citations. Please review it, and sign it, and return it to me.” And so, kind of a very unceremonious end, once the citation was withdrawn, there was no basis that would allow us to proceed with litigation.

Frank Davis: You won the important part of the war for the client, but you didn't resolve the deeper question for the rest of the free world.

John Surma: Yeah, well, and I was really hoping, and Ryan Swink in our office and you had helped me put this together and strategize on it, et cetera, and I was really hoping we'd have an opportunity to test our theory and actually try in court. I mean, we had drawn probably the most favorable U.S. district court judge we could draw, and somebody that I was pretty confident was going to be sympathetic to our request and plea for relief. But until you actually test it, you don't know if it's going to work. And that's what I really wanted to have the opportunity to do. Unfortunately, once OSHA vacates the citation, there's not a whole lot you can do about it.

Frank Davis: In the meantime, working in the background, there've been other cases based on Jarkesy with a different administrative agency, the National Labor Relations Board, and there were four cases throughout Texas in each of the divisions of Texas where arguments had been presented saying that the structure of the National Labor Relations Board, their enforcement mechanism and their use of administrative law judges was unconstitutional on the same grounds you argued in your case. I know you're familiar with that line of cases, and there's been a recent development that you wrote about from August 19th of this year, just a couple of weeks ago, where the Fifth Circuit issued a ruling. Can you give us a summary of the status of that case, and how it implicates the arguments you were prepared to make with regard to the Occupational Safety and Health Administration?

John Surma: Sure, I'd love to. I mean, in brief, what that case, or series of cases, ultimately decided, and it was decided by the Fifth Circuit Court of Appeal, so it would've applied to Louisiana, Texas, and Oklahoma. Was that the dual for cause removal of protections for the administrative law judges at the NLRB had was unconstitutional, and-

Frank Davis: So, stop right there. What is the dual for-cause removal structure you're talking about?

John Surma: In NLRB and in OSHRC, ALJs can only be removed for cause by the Merit System Protection Board. And those folks, the members of the Merit Systems Protection Board, are only removable for cause. So, you have the people who are making the determination on whether or not an administrative law judge can be removed for cause, they can only be removed for cause. And so, there's two layers of decision-maker, or two layers of people involved that have to be removed for a cause, or can only be removed for a cause, I should say. And so, that's the dual.

Frank Davis: And that's the unlawful part because it makes it so the president doesn't have direct removal authority?

John Surma: Correct, and it creates a separation of powers issue.

Frank Davis: Got it. And so, what happened in this conglomeration of cases that the Fifth Circuit took together and made a single ruling on August 19th?

John Surma: Well, I mean, what they ultimately determined was that because the two layers of for-cause removal protection was unconstitutional, that impeded the president's ability to ensure faithful execution of the law, and these types of for-cause removal protections for, quote-unquote, “principal officers” were constitutionally suspect, and therefore they reinforced, they confirmed, they affirmed the district court judge's determinations that those proceedings should be enjoined based on the constitutional challenge, and that participation in the unconstitutional proceedings was in and of itself an irreparable harm.

Frank Davis: And so, the enforcement mechanism of the Labor Board is indefinitely enjoined, at least in the Fifth Circuit?

John Surma: Correct.

Frank Davis: How does that apply, or how does that impact the analysis with regards to the Occupational Safety and Health Administration, and the administrative law judges there?

John Surma: Well, I think more precisely with OSHRC, the organization that, for lack of better term, employs those judges, I think the Fifth Circuit Court of Appeals has basically created a massive opening for us to challenge the dual for-cause removal process that involves the for-cause removal of the ALJ by the for-cause removal only of the Merit Systems Protection Board. And I think that what we could say this NLRB decision is going to do is allow people to say that this is an unconstitutional proceeding that's going to cause irreparable harm, and therefore these proceedings should be enjoined, also.

Frank Davis: And essentially, in an indirect way in response to the application for injunctive relief you filed nine months ago, the Fifth Circuit has indirectly said, “And, John, you were right?”

John Surma: Yes, indeed. Those are some words that John loves to hear. “John, you were right.” My favorite words in the universe.

Frank Davis: So, how could the review commission fix this problem so that we can get back to business as usual?

John Surma: They can't. I mean, this is a statutory creation, and so Congress is going to have to take some action if this happens, and I suspect it will happen, and they're going to have to reform how OSHRC is handled.

Frank Davis: You mean the Congress in Washington?

John Surma: Yes, sir. That's the one. The one and only.

Frank Davis: So, they'd have to revise the Occupational Safety and Health Act to restructure the way the enforcement branch is handled. Am I understanding that correctly?

John Surma: That's correct.

Frank Davis: Does that make the entire Occupational Safety and Health Act unconstitutional?

John Surma: Arguably, it does because it's submitting you or forcing you to submit to an unconstitutional process that results in an unconstitutional proceeding.

Frank Davis: Yeah, that has no end result. It goes back to the justice delayed, justice denied argument, I guess.

John Surma: Yes, sir. It absolutely does.

Frank Davis: Well, John, you'll keep us updated on these events as they develop.

John Surma: I certainly will, and I will keep you up to date in terms of what my day looks like.

Frank Davis: That's outstanding. John, thanks so much for your time today. I know you've got a busy schedule, so thanks for fitting me in this morning, and I will catch up with you soon, as we all. Thank you all for tuning in, and we'll see you next time.

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